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GE-Mitsubishi wind turbine fight threatens Arkansas

General Electric Co.'s effort to keep wind turbines made by Mitsubishi Heavy Industries Ltd. out of the U.S. may hinder Arkansas's plan to become the "Silicon Valley of wind manufacturing." The state has spent two years luring wind-related manufacturers, including Denmark's LM Glasfiber AS and Germany's Nordex AG. In October, Mitsubishi announced plans to build a $100 million wind-turbine assembly plant.

General Electric Co.'s effort to keep wind turbines made by Mitsubishi Heavy Industries Ltd. out of the U.S. may hinder Arkansas's plan to become the "Silicon Valley of wind manufacturing."

The state has spent two years luring wind-related manufacturers, including Denmark's LM Glasfiber AS and Germany's Nordex AG. In October, Mitsubishi announced plans to build a $100 million wind-turbine assembly plant that would bring about 400 jobs to Fort Smith, the state's second-biggest city, with a population of 85,000.

"I'm confident they're coming to Arkansas," said Joe Holmes, marketing head of the state Economic Development Commission, who used the Silicon Valley comparison. "When you take not just the jobs but also the indirect jobs that this will create with suppliers -- everybody's got to eat -- it's tremendous."

The plan may be delayed if the U.S. International Trade Commission, an agency set up to protect U.S. markets from unfair trade practices, sides with GE in a patent battle and bans Mitsubishi turbines from the U.S. market. The agency, which was scheduled to announce a decision today, will now decide by Jan. 8, it said in a notice posted on its Web site. It gave no reason for the... more [truncated due to possible copyright]

General Electric Co.'s effort to keep wind turbines made by Mitsubishi Heavy Industries Ltd. out of the U.S. may hinder Arkansas's plan to become the "Silicon Valley of wind manufacturing."

The state has spent two years luring wind-related manufacturers, including Denmark's LM Glasfiber AS and Germany's Nordex AG. In October, Mitsubishi announced plans to build a $100 million wind-turbine assembly plant that would bring about 400 jobs to Fort Smith, the state's second-biggest city, with a population of 85,000.

"I'm confident they're coming to Arkansas," said Joe Holmes, marketing head of the state Economic Development Commission, who used the Silicon Valley comparison. "When you take not just the jobs but also the indirect jobs that this will create with suppliers -- everybody's got to eat -- it's tremendous."

The plan may be delayed if the U.S. International Trade Commission, an agency set up to protect U.S. markets from unfair trade practices, sides with GE in a patent battle and bans Mitsubishi turbines from the U.S. market. The agency, which was scheduled to announce a decision today, will now decide by Jan. 8, it said in a notice posted on its Web site. It gave no reason for the delay.

GE, the biggest U.S. wind-turbine maker, claims Mitsubishi infringes its patents. If it wins, the Fairfield, Connecticut- based company might prevent Tokyo-based Mitsubishi from increasing its share of the U.S. wind-turbine market, now dominated by GE and Denmark's Vestas Wind Systems A/S.

GE fell 20 cents to $15.59 in New York Stock Exchange composite trading.

Wind turbines accounted for 42 percent of new electricity- generating capacity in the U.S. last year, almost matching the additions of natural gas-fueled plants, according to the American Wind Energy Association, an industry trade group.

20% in 20 Years

The U.S. Energy Department is counting on wind to generate 20 percent of the country's electricity by 2030. The amount was 1.3 percent at the end of last year, the trade group said.

The GE-Mitsubishi dispute has prompted politicians to take sides based on businesses in their states. Arkansas Governor Mike Beebe, a Democrat, and Republican congressmen John Boozman and Marion Berry urged the trade commission to let Mitsubishi proceed with plans for the Fort Smith facility, which would assemble the turbines made in Japan.

GE targeted Mitsubishi's 2.4-megawatt turbines, which are higher producers and more efficient than earlier models.

The Japanese company has been taking orders since at least 2006 for wind turbines in the U.S. It has installed turbines in Texas and has a contract to supply turbines to farms in Oregon and Texas, according to the wind trade group.

GE Backer

Bob Inglis, a Republican congressman from South Carolina, backs GE, employer of more than 3,900 people in a Greenville, South Carolina, plant. In a letter to the ITC, he described the plant as "a facility with the most to lose if this process is swayed by politics."

GE, whose equipment generates one-third of the world's electricity, earlier this month won a $1.4 billion contract to supply turbines and services for an Oregon wind farm that will be bigger than any completed so far, the company says.

An ITC judge in August found Mitsubishi violated GE's patent rights and recommended exclusion from the U.S. The six- member trade commission will decide whether the patents were infringed and, if so, whether to bar imports of the turbines.

Infringing goods can be imported if the commission decides overriding the patents rights would be in the public interest.

The agency's staff, which acts as a third party on behalf of the public, sided with Mitsubishi on the underlying patent case. At the same time, the staff lawyers said the Arkansas investment doesn't meet the public-interest test and those turbines should be barred if Mitsubishi loses.

ITC Staff View

They said otherwise on one project, arguing that Mitsubishi even if it loses should be allowed to send turbines to an Iberdrola SA-run wind farm in Texas that received $114 million in federal stimulus dollars.

An ITC ban on the turbines would face an automatic White House review on public-policy grounds. President Barack Obama's $787 billion stimulus plan to end the deepest recession since the Great Depression dedicates $6 billion in the next two years to expand the country's renewable-energy transmission system, including wind. The underlying patent case can be appealed to a federal court.

The Fort Smith project was announced after the administrative law judge issued his findings. Construction isn't expected until 2011, the ITC staff said.

The turbines, resembling high-tech windmills, convert wind into electricity for a region's electrical grid. Wind speeds change all the time, so the turbines must be built to provide a constant source of power.

Turbine Patents

The three GE patents, issued in 1992, 2005 and 2008, are related to variable-speed turbines. The inventions adjust to ensure a constant amount of power is supplied to the grid without damaging the machines and deal with periods when voltage on the grid is low, such as during an outage.

GE entered the market in 2002 after buying assets from the bankrupt Enron Corp. GE reported about $6 billion in global sales of wind turbines last year and said its turbines represent about half the new wind capacity in the U.S.

It operates plants making turbines and components in Greenville; Tehachapi, California; and Pensacola, Florida.

GE in September sued Mitsubishi Heavy Industries, seeking cash compensation for the patent infringement. That case was put on hold pending the ITC review.

The ITC case is In the Matter of Certain Variable Speed Wind Turbines and Components Thereof, 337-641, U.S. International Trade Commission (Washington). The civil suit is General Electric Co. v. Mitsubishi Heavy Industries Ltd., 09-cv- 229, U.S. District Court, Southern District of Texas (Corpus Christi).

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